Fletcher Building's performance is linked to Australia and New Zealand building cycles. Photo / File

New Zealand's biggest NZX-listed business is forecast to declare a $355 million to $366 million normalised annual net profit after tax tomorrow, up on last year's $326 million.

Forsyth Barr's Andy Bowley and James Bascand and Deutsche Bank's Emily Smith and John Hynd released Fletcher Building analysis, examining the effects of the Christchurch rebuild, housing markets here and in Australia and divisional earnings.

Last Tuesday Bowley and Bascand forecast $355 million and said Fletcher's performance was intrinsically linked to New Zealand and Australian building cycles.

A domestic recovery was under way, supported longer term by the Christchurch rebuild and Auckland house-building market.

"In Australia, leading indicators are supportive to our view that its cycle has turned positive but volume growth will be limited," they said.

FBUnite, Fletcher chief executive Mark Adamson's transformative initiative, would add significant value to the business and deliver meaningful benefits in the second half of the financial year and the first half of 2015, Bowley and Bascand said.

"We are expecting Fletcher Building to report a better, albeit still mixed, performance when it releases its FY14 result on August 20, 2014. We forecast ebit of $624 million, up 10 per cent against the previous corresponding period which implies a stronger second half. Company performance is polarised by the divergent industry backdrops in NZ and Australia. The New Zealand outlook is relatively secure, however more uncertainty persists in Australia," they said.

Sydney-based Smith and Hynd's analysis last Thursday forecast $366 million net profit after tax, excluding significant items, based on $9.3 billion sales revenue, rising to $400 million next year (revenue $10.1 billion) and $507 million (revenue $10.45 billion) by 2016.

They dismissed concerns about next year's earnings, based on the end of the Fletcher EQR project in Christchurch, Mt Wellington's Stonefields residential development finishing and reduced steel earnings. A "well-flagged ebit gap" was signalled between 2014 and 2015 but they said concerns about that were overdone. They upgraded the stock to buy.

"We believe Fletcher will continue to benefit from the New Zealand housing recovery, the Australian housing recovery, Christchurch rebuild and cost reductions," they said.

The peak for the Christchurch rebuild had been pushed out to 2016 and Adamson's restructuring should push up next year's earnings, they said.

Shares look cheap and Adamson's moves could add $50 million in cost reductions in the 2014 financial year.

Fletcher, with a $6.1 billion market capitalisation, was yesterday trading on the NZX around $9 and on the ASX around A$8.22.